German January inflation in focus today
The post-Fed reaction in the market so far hasn't been all too different to the run up going into the FOMC meeting itself yesterday. The dollar is keeping firmer for the most part, with commodity currencies being hammered down on risk aversion.
Of note, equities are seeing red across the board in Asia, with US futures also keeping more subdued following the tumble in the cash market yesterday.
S&P 500 futures are down 0.3% and Nasdaq futures are down 0.5%.
While the Fed reaffirmed their stance for the most part, the market still doesn't seem entirely convinced of what they actually will do and what they say they will do.
Inflation is anticipated to return in Q2 to Q3 this year and with prospects of a stronger economic backdrop, can the Fed really keep their foot on the brakes for long?
Nonetheless, any risk retracement remains a dip to buy into in my view - at least for now. However, we might have to navigate a tricky period to close out the week and keep a watchful eye on the technicals on where to define and limit risk levels.
Likewise for the dollar as the rebound extends despite 10-year Treasury yields flirting with a drop back under 1% ahead of European trading.
0700 GMT - Switzerland December trade balance data
Prior release can be found here. Trade conditions are expected to continue to gradually improve back towards pre-virus levels over time, and that remains the common narrative across the globe as we look to move past the virus crisis in general.
1000 GMT - Eurozone January final consumer confidence
1000 GMT - Eurozone January economic, industrial, services confidence
Prior release can be found here. Confidence levels in the euro area are expected to keep somewhat similar to December as tighter restrictions are still needed to deal with the virus situation in the region, though vaccine optimism does provide some encouragement for the outlook later on in the year.
1300 GMT - Germany January preliminary CPI figures
Prior release can be found here. German inflation is expected to rebound a little to start the new year, with headline annual inflation estimated to creep back up into positive territory. That said, the bounce may still lack vigour unless we see a sustained trend in the coming months. Keep an eye on the Saxony report for clues about core inflation, with the state readings later to provide an idea of what to expect from the national report.
That's all for the session ahead. I wish you all the best of days to come and good luck with your trading! Stay safe out there.
